Newsletter - October2019

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2019 October Issue

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Contents

External Articles

Freight sector concerned over

new UK Customs system 3,4,5

Thailand dangles 50% tax cut

for manufacturers fleeing China 6,7

Trade and the Impact on

Imports and Exports in 2020 8,9,10

Shifting tariff environment

creating new opportunities for

air freight 11,12,13

No sign of gloom lifting for

container sector 14,15

Freight cost management

market set for boom times 16,17

Centrolene AGM2020 18

FINALISTS at the Global

Freight Awards 2019 (ICE) 19

Centrolene Referrals Program 20

Countries wanted:

- Denmark

- Indonesia

- Tunisia

Success project movement by

by Hollandia Forwarding 21

Centrolene Global Coverage 22,23


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Freight sector concerned over new UK

Customs system

Source: Lloyd’s Loading List

Date: 9 th September 2019

BIFA says ‘progress has been inconsistent, with periods of activity and

progress, and then little concrete news’, with concerns heightened by Brexit

issues

The British International Freight Association (BIFA) has expressed numerous

concerns over the progress of the development of a new computer system

that will replace an existing system used for processing Customs declarations.

BIFA director general, Robert Keen said that with the freight and logistics

sector facing numerous challenges including the increasing likelihood of a nodeal

Brexit, and the demands that it will put on the companies that are

responsible for moving the UK’s visible trade, BIFA is concerned that progress

with the development of the new system has been inconsistent, with periods

of activity and progress, and then little concrete news.

Keen stated: “Our single greatest concern is that currently the development

process does not involve representatives of the end-user. This is a dangerous

oversight because it is the end-user who will determine what will actually

work in practice, particularly as IT developers have been flagging up a lack of

clarity regarding data elements.

“To give a simple example, LIC 99 – which indicates a licence waiver for all

types of goods – is to be replaced. The new requirement will be for a licence


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waiver for individual types of licences, which potentially adds complexity and

makes entry completion more difficult in practice.

“Furthermore, despite initial assurances from HMRC to the contrary, it is clear

that the new system will require more significant changes to commercial

software systems than previously envisaged. To give a simple example, a

declaration on the current system –Customs Handling of Import and Export

Freight (CHIEF) – requires the completion of 59 data fields. A declaration on

the replacement system – Customs Declaration System (CDS) – will consist of

78 data fields for import and 65 for export declarations.”

The development of the new system includes many stakeholders – HMRC,

IBM, community systems providers (CSPs), numerous software providers and

representatives.

Keen noted that some of the CSPs and software providers have already

highlighted the difficulties faced in developing the new system, the distinct

lack of clarity regarding some of the data elements and the incomplete nature

of some of the development work. For BIFA, there is a clear indication that the

IT sector has concerns regarding the programme and the suggested

timeframes.

He said: “HMRC has recently announced its proposed plan for completing

delivery of the new Customs Declaration System and migrating traders to the

new platform, which requires all traders to migrate from CHIEF to CDS by

September 2020 in order for HMRC to meet its requirement to turn off CHIEF

in March 2021 when the current contract ends.

“We have heard from CSPs and other software developers, and HMRC itself,

that this timeline is challenging and understand that HMRC has requested

software developers and CSPs to expedite their plans to deliver and assure the

necessary changes to IT systems and business processes without


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compromising the integrity of the border, or the flow of international trade.”

Based on currently available information, BIFA is challenging HMRC, in

conjunction with the IT sector, to identify all the problem areas and formulate

a plan to resolve them, whilst agreeing a realistic timeframe to deliver the

new system, fully developed, stable and tested. It also wants urgent

consideration to be given to involve end-users to ensure that the outcomes

actually work in practice.

Keen added: “Everyone concerned needs to remember that developing the

new core system is only one part of a much bigger jigsaw. Customs agents will

have to collect significantly greater amounts of data from their customers.

Also, within individual data fields we see an increase in options.

“For instance, as previously indicated, LIC99 is a single licence waiver covering

all goods. It is thought that this code will be replaced by multiple options

dependent on the type of licence waiver being claimed. We are encouraging

our members to consider how they will collect and store this additional

information from clients, who often are not fully aware of the new

requirements.

“On top of all these issues, we have to factor in the increasing likelihood of a

no-deal Brexit, and the demands that it will put on our sector. In this scenario

it has to be accepted by all that the implementation of CDS will have to be

delayed, whilst we are using existing systems to facilitate cargo movements

and communicating with the various government agencies to allow them to

perform their role to collect revenues without compromising the integrity of

the border, the flow of international trade, or frontier security.”


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Thailand dangles 50% tax cut for

manufacturers fleeing China

Source: Nikkei Asian Review

Date: 6 th September 2019

Bangkok seeks to draw high-tech production in competitive region

BANGKOK -- Thailand announced a package of incentives Friday, including a

50% tax cut, for companies to relocate production to the slowing Southeast

Asian economy from China amid the Sino-American trade war.

To qualify for the incentives, companies must apply next year for approval to

invest 1 billion baht ($32.7 million) or more in the country and carry out the

investment by 2021.

Approved investors will see their corporate tax obligations reduced by half for

five years.

The incentives show Thailand jockeying for foreign investment against

neighbors like Vietnam as the country seeks to move its manufacturing sector

into higher-value activities.

Forty-eight multinationals including U.S. chipmaker Western Digital are

considering relocating production to Southeast Asia from China, Thailand's

Office of the National Economic and Social Development Council says.


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Ten of these companies are strong candidates for investment in Thailand,

according to the office.

"Under the new package, Thailand can compete with other countries in Asia

for foreign investment, especially to attract advanced technology firms that

want to move production to Thailand," Kobsak Pootrakool, an official in the

prime minister's office, said at an economic policy meeting on Friday.

Beyond offering a tax cut, the government also will create a single portal that

advises companies on their applications and allows them to file.

To encourage training of skilled workers, tax breaks will be offered to offset

the cost of building training centers and providing employee development

programs. Labor rules will be eased to help skilled foreigners work in Thailand.


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Trade and the Impact on Imports and

Exports in 2020

Source: Global Trade Magazine

Date: 11 th September 2019

Significant and sustained increases in the world trade index (an index

measuring the number of times the word uncertainty or its variants are

mentioned in Economist Intelligence Unit (EIU) reports at a country level)

should be a worry for many as “the increase in trade uncertainty observed in

the first quarter could be enough to reduce global growth by up to 0.75

percentage points in 2019”

In August, the US Institute for supply management latest report shows a

contraction in production, purchasing, and employment indices.


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Uncertainty generated from Brexit, theUS-China trade war, Japan – South

Korea trade wars, and general discontentment with global trend towards

widening income inequality is creating a toxic mix for politicians to deal with.

The irony is the conventional approach of blaming your trading partners for

your problems is only likely to exacerbate a general lack of confidence and

increase further uncertainty.

The current round of the G7 summit in Biarritz concluded with support “to

overhaul the WTO to improve effectiveness with regard to intellectual

property protection, to settle disputes more swiftly and to eliminate unfair

trade practices.” In essence, it’s signaling a need to strengthen the capabilities

of the WTO to act faster and more decisively in resolving disputes that are

even more political than structural in nature, requiring a more multi-faceted

engagement approach. Whilst this may help in the long-run, in reality,

companies will have to contend with uncertainty in global trade for some time

to come as well as the impacts on the real economy from these disputes.

And all of this is happening as IMO 2020 approaches, the January 1, 2020,

date by which the International Maritime Organization mandates a switch to

lower sulfur fuels in order to achieve an 80% reduction in sulfur emissions

leading to significant cost increases in the shipping goods via ocean freight

(initial estimates between 180USD – 420 USD per TEU dependent on routing,

base fuel costs, carrier).

So given the significant uncertainty around global trade agreements, the

increasing use of trade as a political football, the increasing costs to trade and

the shortening of product lifecycles as customers want faster, newer more

differentiated offerings. Is it still worth it?

Of course this is very much dependent on what industry you are in. Whether

you’re a global manufacturer or a wholesaler sourcing goods, your

perspectives may be different based on investments made, sensitivity to


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current trade/tariff measures, customer demands, your markets, and the

degree to which you are exposed to political debate and targeting.

However, I would offer that the benefits of specialization, economies of scale

and unique factors of production that have underpinned global trade still exist

as Adam Smith put it in 1776:

“By means of glasses, hotbeds, and hot walls, very good grapes can be raised

in Scotland, and very good wine too can be made of them at about thirty

times the expense for which at least equally good can be brought from foreign

countries. Would it be a reasonable law to prohibit the importation of all

foreign wines, merely to encourage the making of claret and burgundy in

Scotland?”

Today this simple analogy still holds true in skills, competences, capabilities,

and access to markets and insights so that over time the expectation is that

trade will prevail.

While the recent outlook has been gloomy, opportunities for 2020 include a

resolution to a number of ongoing disputes and a final settlement on Brexit

(we hope). Additionally, the maturation in technologies such as blockchain,

process automation, forecasting and demand management solutions can also

offset costs associated with IMO and support greater agility in the uncertain

supply-chain world that we currently live in.

Indeed, if 2019 was the year of trade uncertainty, 2020 could be a restorative

year in our ability to execute global trade.

Partnering with an experienced supply chain leader will be essential to

minimizing cost increases while ensuring the efficient flow of your company’s

goods and services.


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Shifting tariff environment creating

new opportunities for air freight

Source: Lloyd’s Loading List

Date: 20 th September 2019

Trump decision this month to delay 30% tariff list to 15 October likely to lead

to further adjustments to freighter schedules, notes forwarder Flexport

US President Donald Trump’s decision last week to delay to 15 October the

implementation of new 30% tariffs on a list of imports from China is likely to

lead to further adjustments and fine-tuning of orders and freighter schedules,

according to freight forwarder Flexport, and is a further example of how the

rapidly shifting tariff environment is creating some new opportunities for air

freight.

In the latest twist in the tit-for-tat game of tariff announcements and

increases between the United States and China, Trump said on 12 September

that the 30% tariff affecting List 1, 2, and 3 goods – set to take effect on 1

October – would be delayed to 15 October “as a gesture of goodwill” toward

China. The first week of October, known as Golden Week, is a national holiday

across the country, with Trump stating that moving the tariff deadline came at

the request of China’s vice premier Liu He, to avoid any interference with the

country’s celebrations.

Flexport noted that with negotiations between the US and China set to

resume in early October, this delay may give both parties time to come to an

agreement and avoid the tariff increases altogether. According to Flexport vice

president of customs and trade advisory, Tom Gould, this announcement may


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also have a significant impact in terms of cost savings – to the tune of 5% for

15 days on Lists 1, 2, and 3 goods.

“As with the September 1 tariff implementation, the new October 15 deadline

will likely see freight forwarders adjusting air shipments to accommodate lastminute

imports ahead of rising rates,” Flexport noted. Flexport’s air freight

service provided one such service prior to 1 September – a previous tariff

deadline – rescheduling the arrival of a HKG-ORD flight to land at 23.45 on

31August, “saving customers time and money”.

Gould commented: “The unpredictable nature of the trade war puts a

premium on a freight forwarder’s agility and ability to develop flexible

solutions to best serve customers. As circumstances surrounding upcoming

tariffs continue to change, forwarders must be willing to go above and beyond

to serve their clients as the situation evolves and hopefully reaches a

resolution.”

Flexport said the rapidly changing tariff environment had presented new

opportunities to use air freight, as businesses investigate alternative options

for manufacturing and shipping.

“Trade regulations and tariffs have created an intriguing landscape for

companies worldwide,” said Alexis Boutet, senior director of global airfreight

strategy at Flexport. “We are gradually beginning to see global companies

realign their supply chains to avoid losing money. For these businesses,

airfreight delivers the agility to quickly complete these moves and minimize

downtime.”

As companies seek to build footprints in emerging markets, air freight offers

the opportunity to quickly and efficiently relocate equipment necessary for

manufacturing, Flexport noted, adding: “For companies weighing the costs of

continued high tariffs against opening manufacturing facilities in an emerging

market, air freight presents a compelling option.


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“Relocating an entire manufacturing production facility often requires moving

heavy machinery and putting production on hold. Moving this equipment via

ocean exposes a business to the common pitfalls of container shipping: port

congestion, longer transit times, and more.

“More importantly, however, ocean transport puts a facility out of operation

for weeks, if not months. With airfreight, however, necessary equipment can

be moved and back up and running in days.”

Flexport highlighted a number of moves by companies in response to

changing US-China tariffs. For example, diesel engine manufacturer Cummins

Inc reported $50 million in avoided tariffs by shifting production from China to

India and other nations, while footwear brand Crocs expects less than 10% of

its imports in 2020 to come from China.

In a guide entitled ‘The Agile Supply Chain: Leveraging Airfreight Strategically’,

Flexport said shifting exports was one method companies have used to help

mitigate exposure to tariffs, with air freight used by some to make this

possible, by quickly relocating sourcing or production processes to new

locations.

But for many businesses, it said the challenge of rising tariffs may lie less in

the increasing costs “and more in the potential for reducing shipment delays”,

adding: “With each tariff announcement, a surge of Chinese exports follows,

as businesses aim to get their goods to the US ahead of implementation, at a

lower rate. In these instances, airfreight can also help companies avoid makeor-break

scenarios caused by port congestion.”

It continued: “Unlike the expected crunches of peak season, increased

congestion caused by tariffs is shaping up to be an unpredictable, long-term

concern. With this in mind, more businesses are beginning to lean more

heavily on-air freight to keep things moving.”


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No sign of gloom lifting for

container sector

Source: Lloyd’s Loading List

Date: 19 th September 2019

Carriers are already struggling with a weak market. But a global

manufacturing slowdown means there a few signs of relief in sight

Slowing intra-Asia trade points to a difficult remainder of the year for the

wider container shipping sector, according to a new report from BIMCO.

“Growth rates on intra-Asian container trades are viewed as an indicator of

what is to come on long-haul routes, as volumes here indicate the health of

supply chains in the region and therefore what finished goods are likely to be

exported from Asia in the near future,” BIMCO said.

“With a volume growth rate of 0.8% in the first seven months of 2019, low

growth levels can be expected in global demand for container shipping for the

remainder of the year.”

The continued slowdown in global manufacturing and the broader global

economy will also affect container shipping, with BIMCO expecting the GDP

multiplier to stay around one for the foreseeable future.

“The slowing demand growth means that despite the comparatively low fleet

growth expectations which of 3.5%, the fundamental balance of the container

shipping market will worsen this year,” BIMCO said.


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“Furthermore, with the fleet currently projected to grow by 3.2% in 2020 this

is unlikely to change much next year, with the industry heading deeper into a

hole.”

Cutting costs would remain the main focus if carriers are to weather the

storm, it added.

“Adding to the worsening of the fundamental balance, the added fuel costs

due to the 2020 sulphur cap paints a disturbing picture for the rest of the

2019 and 2020 for container shipping,” BIMCO said.

“The oversupply of capacity is likely to make it difficult for shipowners to

recover the additional fuel costs.”


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Freight cost management market

set for boom times

Source: Lloyd’s Loading List

Date: 20 th September 2019

Rise in data volumes and increased complexity of supply chain across

industries push the need for advanced processing solutions, set to triple in

size by 2025

Europe’s freight cost management (FCM) market is set to expand rapidly in

the next few years, as small to medium enterprises (SMEs) increasingly

digitise their time-consuming invoice verification and claims management

processes.

Analysis by Frost & Sullivan reveals that owing to these development, the

region’s freight cost management market is poised to register a compound

annual growth rate (CAGR) of 17.4%, with gross market revenues predicted to

rise from €484 million in 2018 to approximately €1.49 billion by 2025.

“So far, there has been a lack of transparency and ineffective communication

between shippers and carriers in the end-to-end supply chain process,” said

Krishna Chaithanya Bathala, Industry Analyst for Automotive & Transportation

at Frost & Sullivan.

“However, with the emergence of freight cost management solutions

powered by digital technologies, the shippers’ capability in data warehousing

and benchmarking carriers’ performance has been enhanced.”


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Frost & Sullivan’s latest study, European Freight Cost Management Market,

Forecast to 2025,examines the overall freight cost management market in

Europe. The research offers analysis of the current market scenario and

provides strategic observations and insights for companies that want to

venture or expand into this sector.

While the FCM market is dominated by legacy participants such as SAP,

Oracle, and JDA, which hold a combined market share of about 55%, it will still

remain attractive for niche participants like the Alpega Group, Eyefreight, AEB,

and LOCOM, the report notes, adding: “Their cost-competitiveness,

adherence to changing requirements, capability to offer personalised services,

and new business models are better suited to the needs of SMEs, offering

significant room for the penetration of FCM tools.”

Suriya Anjumohan, Industry Analyst for Automotive & Transportation at Frost

& Sullivan, commented: “Going forward, agility, cost, and speed will be the

top three determining factors for vendor selection in the FCM service market.

Service personalisation and the ability to quickly attend to change requests

from customers will help in gaining a competitive advantage in the industry.”

The report suggests that companies operating in the FCM market should

explore the growth opportunities by:

• Partnering with niche companies rather than legacy participants, which

will facilitate easy onboarding of SMEs due to their highly costcompetitive

offerings.

• Developing or acquiring blockchain capabilities with smart contracts

solutions, which will increase transparency in freight audits, secured

payments, and record management.

• Offering increased process automation capabilities, which enable

companies to improve cost efficiencies by allowing for electronic

submission, processing, and clearance of invoices from carriers.

• Deploying artificial intelligence and data analytics to support effective

freight risk management and freight cost analysis.


Centrolene Network AGM 2020

A successful Centrolene AGM 2019 has just ended in February. While we are busy

following up each and every business generated from the AGM, Centrolene would

like to again invite you to save the date to join the exclusive group of your peers

from the leaders of freight logistics industry from 8th to 10th March 2020 for

industry updates and most importantly, NETWORKING!

As usual, space will be limited so make plan now to be at this exclusive meeting.

Phuket, Thailand has been chosen and conference venue will be announced very

soon.

Please do not hesitate to contact Anna Neo, anna@centrolene.com if you have

questions about Centrolene AGM 2020.


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Hollandia

Forwarding B.V.

Breguetlaan 12A 1438 BC Oude meer

The Netherlands

Consignment was designated for an offshore project where

Hollandia has loaded the cargo at the Saipem 7000 Vessel in

Rotterdam with their owned truck.

5 steel plates with a total of 3,418 kg which they sent by airfreight

to final destination.


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2019 October Issue

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